VIX In Backwardation

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panzerman

The VIX futures are in backwardation as of today (VIX3M/VIX ratio is less than 1.) I bought SVXY today in response.

Your strategy on volatility moves like today?
 
I think VIX in backwardation is the best time to short (not go long) VIX products. Sure its in backwardation, but that never lasts very long, and is an indication that it might correct itself VERY FAST, which would be by a huge drop in the VIX to what the market thinks is more normal. But don't go in all at once, like average in over the next 30 days.
 
I'm getting ready to buy svxy only because volatility always, always, always drops like a rock anytime the vix soars to 30+ level.....yes sometimes it spikes above the 40-50 range but that only lasts a day or two....will wait for 30-35 on the vix to get in on svxy.
 
panzerman said:
The VIX futures are in backwardation as of today (VIX3M/VIX ratio is less than 1.) I bought SVXY today in response.

Your strategy on volatility moves like today?
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If VIX is in backwardation, you are supposed to SELL SVXY, NOT buy. It's an inverse volatility instrument, meaning when VIX goes up, it goes down.
 
JSOP said:
If VIX is in backwardation, you are supposed to SELL SVXY, NOT buy. It's an inverse volatility instrument, meaning when VIX goes up, it goes down.
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Hahaha, yea, thought he had it backwards. Although I suspect JSOP that if you had a strategy of only selling SVXY or the other long VIX products once VIX enters backwardation it would be extremely profitable. But just a hunch, I could be wrong.
 
Here we are again, VIX in Backwardation. I made money earlier this week by covering my long SVXY position from last week, so I had to try it again.
 
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